Responsibilities Fiduciary

Generally, the board of directors of a corporation has responsibilities to its investors, including a fiduciary duty. In overseeing the corporation's management and financial affairs, the board owes both a duty of loyalty and a duty of care to the corporation's shareholders. With respect to the duty of loyalty, directors must act in good faith at all times, in a manner that is reasonably calculated to further the best interests of the corporation. Likewise, as to the duty of care, directors must consider all reasonably available material information, and act with care in making decisions. However, the directors are given a fair amount of discretion in making business decisions, under what is known as the "business judgment rule". In other words, a court reviewing a director's business decisions presumes that the directors acted in good faith, on an informed basis, and with the belief that they were acting in the best interest of the corporation. Therefore, it requires a fair amount of proof to overcome the business judgment rule.

Fast Facts

  • The typical fraud case involves losses of $50,000 or less, by a person with no prior criminal record.
  • The number of Suspicious Activity Reports filed by financial institutions in suspected mortgage fraud cases increased 44% from June 2007 to June 2008 over the previous year.

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